Korea's Dongwon Group to acquire Dongbu Express at $421 mn

South Korea’s processed food-making conglomerate Dongwon Group would acquire the country’s third largest logistics player Dongbu Express to diversify businesses and create synergy effects with its existing fishing, food and packing material businesses.

According to the investment banking industry on Tuesday, Dongwon Enterprise Co., a holding company of Dongwon Group, signed a memorandum of understanding (MOU) for the takeover with the full stake from a consortium led by KTB Private Equity and Q Capital Partners. It has currently carried out due diligence. The 100 percent stake of the company is estimated to cost the company about 470 billion won ($421 million).

“We acquired the exclusive negotiation right and are now discussing details for a deal,” said an official of Dongwon Group.

The acquisition would add full-fledged physical logistics arm to the food conglomerate whose mainstay is in marine, food and packing business. The group had the logistics operation under its unit Dongwon Industries Co. from 1996 for small-scale distribution business.

Dongwon Group has been interested in Dongbu Express since it was put up for sale early last year.

“The logistics business would create synergy effects with existing fishing, food and packing material businesses,” said an official of the Group.

Dongbu Express runs logistics services on land and sea as well as passenger transportation and car rental business. The company recorded 44.4 billion won in operating profit and 719.5 billion won in sales last year.

The consortium led by KTB PE and Q Capital Partners raised fund worth 310 billion won in 2014 to buy Dongbu Express from Dongbu Group. It put up the logistics company for sale in the following year after the parent company Dongbu Corp. went under court receivership. The first attempt to sell the company to Hyundai Department Store Group fell through due to price difference.

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